* OPEC supply rises for third consecutive month
* Tropical Storm Edouard threatens oil and gas
infrastructure in Gulf of Mexico
(Updates prices, market activity)
By Golnar Motevalli
LONDON, Aug 4 (Reuters) - Oil fell below $120 a barrel on
Monday, pressured by evidence of rising OPEC output in the
midst of declining demand in the United States and Europe.
The losses, adding to a record slide from the mid-July peak
over $147 a barrel, came despite a storm in the Gulf of Mexico
that was curbing oil production, shipping and refining.
"Crude futures are down despite a brewing storm and that
shows you how momentum has shifted in this market," said Phil
Flynn, analyst at Alaron Trading in Chicago.
U.S. light crude <CLc1> fell $4.10 to $121.00 a barrel by
1640 GMT after slipping as low as $119.50. London Brent crude
<LCOc1> dipped $3.55 to $120.63 a barrel.
The losses came after a Reuters survey showed OPEC supply
rose for a third consecutive month in July mainly because of
increased output from the world's top exporter Saudi Arabia.
The boost in production from OPEC comes as soaring energy
prices and an economic slowdown cut into consumption in the
United States and Europe.
"The market is focused on falling demand with OPEC seen
producing more oil," said Alaron's Flynn.
The bearish impact was countered by Tropical Storm Edouard,
which was barreling across a major oil and gas producing area
of the northern Gulf of Mexico.
The storm affected shipping and port operations, triggered
evacuations and minor production outages offshore, and forced
at least one refinery along the coast to shut. []
The storm was expected to come ashore at close to hurricane
strength Tuesday on the Texas-Louisiana coast.
Traders also were nervous supplies could be disrupted as a
result of tension between the West and the world's fourth
largest oil producer, Iran.
The head of Iran's revolutionary guard was quoted as saying
Iran could close the Straits of Hormuz, a key Gulf shipping
route, if it were attacked over its nuclear programme.
Mohammad Ali Jafari's comments followed a telephone meeting
between Iran and representatives of six world powers about
Tehran's nuclear programme in which the Islamic Republic said
it would press ahead in spite of a demand to halt the work.
Tehran failed to meet Saturday's informal deadline to
respond to a package of incentives offered by the six powers.
Oil supplies already have been disrupted from Nigeria, the
world's No. 8 oil exporter, as a result of militant attacks
that have cut about a fifth of its production.
Gunmen kidnapped two French expatriates near the country's
oil industry hub of Port Harcourt in the restive Niger delta,
military and security sources said on Sunday.
(Reporting by Richard Valdmanis in New York, Fayen Wong in
Perth, Ikuko Kao and Golnar Motevalli in London; Editing by
David Gregorio)
